What happens to our property when we separate?
When you are separating from your partner, you need to consider what is to happen in relation to the division of any property that you own.
The Family Law Act provides for property settlements between couples who are, or have been married and also couples who have been in a de facto relationship.
A de facto relationship includes a relationship between two people of the same sex.
The powers set out in the Family Law Act can be exercised by the Federal Circuit and Family Court of Australia or a Local Court, depending on the value of the property involved, and the complexity of a matter.
Amicable Resolutions
If both parties have reached an agreement as to how the property will be divided, we recommend the parties enter into a legally binding and enforceable agreement
In many cases parties are able to reach agreement about a property settlement with the assistance of their lawyers. If they do, they can make an application for consent orders which is approved by the Court or enter into a Binding financial agreement. There can also be certain tax benefits and stamp duty reduction benefits by having orders made.
What happens when the parties are unable to reach an agreement about the division of property?
If you cannot reach agreement with your former partner as to a property settlement, then you need to file an application for property settlement with the Court .
The parties will be encouraged to resolve any issues by mediation rather than a decision being made by the Court.
If a settlement cannot be achieved, the Court will make a decision as to how the property of the couple should be divided after a hearing before a judge.
What are the steps involved in an application for property settlement under the Family Law Act?
Step 1 –identifying and valuing the assets, liabilities and financial resources of the parties
This first step involves identifying and valuing the assets, liabilities and financial resources of the parties. This includes all assets, liabilities and financial resources, whenever and however acquired.
Step 2 – Assessment of the contributions made by the parties
The second step involves the assessment of the contributions made by the parties during their relationship. These include:
direct and indirect financial contributions to the property of the parties;
contributions to the welfare of the family, including contributions in the capacity of homemaker or parent; and
direct and indirect non-financial contributions to the property of the parties.
The Court, may find that the contributions of the parties were not equal, particularly in the following instances:
where the relationship is short and there are no children, in which case the Court will consider the direct financial contributions made by each of the parties;
where one of the parties has made a substantial contribution by way of an inheritance, gift from family or personal injury settlement;
where one of the parties has entered the relationship with considerably more assets than the other party; and/or
where the deliberate or reckless conduct of one of the parties has resulted in a loss to the parties.
Step 3 – Assessing the future needs of each of the parties
The third step involves assessing the future needs of each of the parties. The Court must consider such things as:
the age and state of health of each of the parties;
the income, property and financial resources of each of the parties and their capacity for employment;
who has the care of any child of the relationship under the age of 18 years;
commitments necessary to enable a party to support himself or herself or any other person that the party has a duty to maintain;
the eligibility of either party for a pension superannuation;
the standard of living that is reasonable in the circumstances;
the extent to which the earning capacity of a party has been affected by the relationship; and
if either party is living with somebody else, the financial circumstances of their household.
When the Court considers these factors it will then decide whether there ought to be an adjustment in favour of one or other of the parties to compensate for any difference in their future circumstances.
Step 4 – Is the proposed division of property fair to both parties?
The Court must then decide whether the proposed division of assets is fair to each of the parties. This assessment is done by holistically examining the circumstances of each case.
Binding pre-nuptial or pre-relationship agreement?
The Family Law Act provides for binding financial agreements to be made between parties to a marriage or de facto relationship. These agreements can be made before, during or after the end of the marriage or de facto relationship.
It is possible for parties entering into a marriage or de facto relationship to agree what will happen to their property in the event that they separate.